Provident Energy Consulting

NYMEX January Gas Settles 27.1 Cents Lower on Temperature Forecast

The NYMEX January natural gas futures contract slumped 27.1 cents Wednesday to settle at $4.136/MMBtu on the back of the US National Weather Service forecast for the rest of the month.

The prompt-month weakness dragged the rest of the winter strip
lower, with double-digit declines posted by the February and March
The February and March contracts fell 22.3 cents and 18.8 cents,
respectively, to settle at $4.035/MMBtu and $3.853/MMBtu.
The February contract traded in a $3.99/MMBtu-to-$4.275/MMBtu
range, breaching the $4/MMBtu support mark on an intraday basis
before settling just above it.
A day ahead of the Energy Information Administration’s release of
its weekly gas storage data, S&P Global Platts’ storage survey showed
the consensus among analysts is for a 79 Bcf draw from inventories in
the week that ended December 7.
A storage withdrawal of this size would put US stocks at 2.912 Tcf.
The warmer weather has caused demand to dip, and further
declines are expected as 2018 peters out.
US demand dropped 4.8 Bcf day on day on Wednesday to 94.5
Bcf. S&P Global Platts Analytics expects a 89.6 Bcf/d for the coming
seven days. This falls in line with December 2017’s monthly average
of 89.7 Bcf/d.
On the heels of news emerging Tuesday that Corpus Christi LNG,
the third Lower 48 states LNG terminal, exported its first
commissioning cargo, total US LNG feedgas demand stood at 4.7 Bcf
Wednesday. Platts Analytics expects feedgas demand to decline to an
average of 4.0 Bcf/d over the next 14 days as demand fluctuates for the commissioning.
Across the US, temperatures are expected to remain 4 degrees
Fahrenheit above normal for the rest of the year, Platts Analytics
data show. The warmer forecast was also reflected in spot gas markets. The Henry Hub cash price decreased 30.5 cents Wednesday to $4.195/MMBtu. Henry Hub balance of the month declined 21.2 cents to $4.198/MMBtu.

Source: Platts 2018

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